# Bourbon News



## bc3po (Feb 26, 2005)

Oct 15, 12:07 PM EDT

Bourbon makers Jim Beam, Maker's Mark set to embark on new alliance

By BRUCE SCHREINER
Associated Press Writer

LOUISVILLE, Ky. (AP) -- Until recently, Jim Beam's chief executive would have been on rival turf when hobnobbing at the Maker's Mark Bourbon House and Lounge in a downtown entertainment district.

But the impending consolidation of two famous names in bourbon put Tom Flocco in friendly territory. Even his choice of whiskey - Maker's Mark - was a sign of the new alliance.

Jim Beam and Maker's Mark will become stablemates under the banner of Fortune Brands Inc. in a deal expected to close in coming weeks or months.

Flocco, president and CEO of Jim Beam Brands Worldwide, a Fortune subsidiary, had been talking strategy with Bill Samuels Jr., president and chief executive of Maker's Mark Distillery. Flocco said the addition of Maker's - the brand known for its distinctive red wax seal - was a good fit with Jim Beam, the world's top-selling bourbon.

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"For us, this is about finding the right combination with all the bourbons in the portfolio to penetrate what we think is a terrific category and is really starting to grow," Flocco said.

Fortune Brands, based in Lincolnshire, Ill., recently gained final regulatory approval to acquire Maker's Mark from Pernod Ricard. The French drinks company obtained Maker's following its takeover of British company Allied Domecq PLC.

Samuels said the deal between Fortune and Pernod offers considerable potential by joining two brands at the forefront of making bourbon "the fashionable spirit of choice."

"Every indication I have is that they think, as investors, that they bought a good thing that's likely to continue on pretty much the way it got where it got," Samuels said.

He said Maker's new parent has "a global perspective about bourbon that aligns perfectly with our own, and they've got the horsepower to do something about that."

Samuels said longtime Maker's owner Allied Domecq never showed confidence in bourbon's potential as a "serious global player. And Jim Beam does. That's what makes me excited."

"This is about anticipating that the native spirit of Kentucky is very close to becoming a big thing globally," Samuels said. "We think we can participate best by being together."

The recent get-together was the first chance Flocco and Samuels had to discuss strategy since the Federal Trade Commission cleared the way for Fortune Brands' acquisition of Maker's and its distillery in Loretto, Ky. Maker's is among more than 20 spirits and wine brands that Fortune Brands acquired from Pernod for about $5 billion.

Flocco was tightlipped about where Maker's fits in with Jim Beam and its own small-batch brands - Knob Creek, Booker's, Basil Hayden's and Baker's.

"We have some clear ideas that we need to work through the specifics on, how all that fits together," Flocco said.

One thing is certain - the red wax seal will remain atop Maker's Mark bottles. Also, the 65-year-old Samuels is staying put as president of Maker's Mark, Flocco said.

Flocco said the goal is to preserve Maker's "brand heritage, quality and market success."

The acquisition brings together two storied names in Kentucky bourbon history.

Jim Beam's roots in the industry reach back to 1795, when family patriarch Jacob Beam first sold a barrel of whiskey. Jim Beam's grandson, Booker Noe, was master distiller at Jim Beam for years and was an innovator in small-batch production techniques that age bourbon longer before bottling. Noe's son, Fred, has a visible role as bourbon ambassador for Jim Beam Brands.

Meanwhile, Samuels is a seventh-generation bourbon maker in Kentucky and his parents created Maker's Mark, which celebrated its 50th anniversary in 2004. Maker's production has risen from 113,000 cases in 1981 - when Maker's first changed hands - to 617,000 cases.

In the close-knit world of Kentucky's bourbon barons, Jim Beam was a close friend of Samuels' grandfather and mentor to Samuels' father.

John Hansell, publisher and editor of Malt Advocate, a consumer-whiskey magazine, said Maker's Mark should complement Fortune Brands' bourbon lineup.

"They are different styles of bourbons," he said. "Maker's Mark is made with wheat, in addition to corn and malted barley. Jim Beam uses the more traditional rye, not wheat. For this reason, the flavor profiles are different."

Another industry observer, F. Paul Pacult, editor of Spirit Journal, has a less rosy forecast. He said the marriage between Maker's Mark and Jim Beam could be a "mismatch" that has "trouble written all over it" for Maker's.

From the outset, Maker's will be a direct competitor of Jim Beam Black and Beam's small-batch collection, Pacult said in an e-mail response.

"Heated competition within such a large company may instill a healthy sense of intramural competition, or it can implode, causing casualties," he said. "I would vote in favor of the latter happening because of the fierce internal loyalty to Jim Beam as the company flagship and emblem."

Pacult also wonders how Samuels will fit into Beam's corporate structure. He said Samuels was "used to going his own way" when Maker's was controlled by Allied Domecq.

In contrast, Jim Beam Brands is a "tightly controlled, tightly wound company that places a premium on everyone towing the line," Pacult said.

It was all smiles, though, as Flocco and Samuels sipped bourbon at the Maker's Mark Bourbon House and Lounge.

"I've spent 23 1/2 years since dad sold the company running around trying to find somebody that was as passionate about what I was doing as I was. And today I found him," Samuels said of Flocco.


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